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The big day for Lehman Brothers is Sept. 18, the day it will announce a big third-quarter loss and most likely some capital raising plans. The conference call is going to be a doozy. Everything is at stake. There needs to be a Plan A, a Plan B and more plans down the alphabet. It would be best to announce a major deal. That may not happen. It's not clear at all that potential Korean investors will agree to anything. Indeed, the talks appear to be dead.

Forbes notes that Lehman Brothers has $24 billion of residential mortgages and another $29.4 billion of commercial mortgages on its books. There has been talk that Lehman will sell its commercial portfolio before that market tanks, which might be soon. Valuations are already starting to dip. If it were to sell the whole portfolio, Lehman could be looking at a mark-to-market loss of up to $4.9 billion, Sanford Bernstein estimates; any losses over $1.5 billion would require another capital raise.

It is never a good sign when your company is in financial trouble to find out that reporters, analysts, and private equity investors are suddenly interested in the value of the building that houses your headquarters. As reported in a Here Is The City News article, apparently this is exactly what some at the Financial Times and elsewhere are doing.

Not many firms have been as aggressive in commercial real estate as Lehman Brothers (LEH). As I recall, it was only ten months ago when the private equity - Tishman Speyer Properties and Lehman Brothers - closed their $22.2 billion acquisition of Archstone-Smith apartment real estate investment trust, where Lehman provided the riskiest part of the financing.

The notion that Lehman Brothers might split itself into a bad bank--holding lots of troubled assets--and a good bank--the rest of Lehman--has been floating around for a while. Does the article in the New York Times suggest Lehman execs want a better gauge of how such an idea might be received?

We have a bit more clarity on the Lehman Brothers situation now that it has released preliminary third-quarter earnings and a peek at capital raising activity. The firm says it will sell a 55 percent stake in its asset management, private equity and wealth management. It will retain its hedge fund stakes. This deal will raise book value by $3 billion, as goodwill from Neuberger Berman disappears. It also will retain the pre-tax income from these units. But there's no deal yet. We're not sure who the buyer is.

Lehman's announcement that it would spin off a bad bank was widely expected, and to many it seemed like a reasonable move. But not so fast. The issue of how the bad bank will be financed long-term has come up, of course. Breakingviews says until Lehman can spin off the bad bank, it assumes liability for the first losses, suggesting that there are lots of junior subordinated debt in its portfolio. That stands in contrast to deals by Merrill Lynch and UBS to offload toxic bonds to Lone Star and BlackRock.

The news with Lehman Brothers (LEH) just keeps coming.

Lehman Brothers (LEH) recently announced that it is taking a Good Bank/Bad Bank approach to tens of billions of dollars of illiquid real estate assets, hiving them off from the rest of the firm. Nice to see someone is listening.